Scrapped vessels may triple

Precious Shipping Pcl expects a third of the global merchant fleet to be scrapped within two years as trade collapses amid a global recession and tighter credit.

Precious Shipping Pcl expects a third of the global merchant fleet to be scrapped within two years as trade collapses amid a global recession and tighter credit.

Precious Shipping Pcl, Thailand"s largest shipping company by market value, expects a third of the global merchant fleet to be scrapped within two years as trade collapses amid a global recession and tighter credit. ?The banking system is destroyed,? Chief Executive Officer Khalid Hashim said at a shipping conference in Singapore yesterday. ?China"s stimulus plan will help? revive trade, ?but it will not be able to immediately.?

The number of vessels scrapped this year may triple on a trade slump caused by China cutting imports of iron ore and U.S. and European consumers paring spending on Asian-made goods. At the same time, new ships are entering service as shipyards complete orders placed two or three years ago, when trade was booming.

?Dry bulk demand is still going down this year,? Hashim said. The Baltic Dry Index, a measure of shipping costs for commodities, has fallen 72 percent in the past year.

The number of ships scrapped this year will likely jump to 1,000, Lloyd"s List said on Feb. 19, citing Anil Sharma, president of Global Marketing Systems, Inc., the world"s largest cash buyer of ships. Global trade may decline this year for the first time since 1982, according to The World Bank.

Precious Shipping operates 43 vessels carrying iron ore, rice, wheat, soybeans and other dry-bulk freights. The company is in talks with banks to raise as much as $250 million to replace its 25 oldest vessels, Khalid said last month.